I believe the custom factions are referenced by their file names, which currently are just the factions' short titles.  This makes it impossible to actually have two factions of the same name, even if they are of differing allegiances, or races.  The new faction you created most likely overwrote the previous one, and now all of the old faction's custom units are being automatically assigned to the new one.  The file names for custom factions and the way they are distinguished needs to be more distinct.

Also: "Custom sovereigns of the first created faction will automatically be reassigned to the second as it is overwritten, making for some interesting character designs to say the least."

https://forums.elementalgame.com/433059/get;3241917